We set out to investigate whether his statement rang true. It didn't.
What we discovered was that companies are still searching for ways to streamline
and lower the cost of software development. Sending product engineering offshore
is one of those ways.

The Changing Economics of Software Product Engineering

The software industry depends on new versions, features, and products. We
found that companies competing in this tough sector are undergoing a
metamorphosis as they attempt to balance the twin challenges of reducing
development costs and bringing products to market quickly.

Developing new software is complex, expensive, and labor-intensiveso
much so that it has led companies such as Autodesk, SAP, Cadence, Google,
Oracle, and Microsoft to offshore parts of the product engineering process and
to concentrate on high-level requirements-gathering, marketing, selling, and
ongoing project management.

When the practice of outsourcing IT work to lower-cost countries first picked
up speed in the 1990s, such companies were hesitant to assign vendors or
in-house development teams based offshore to anything other than well-defined
projects requiring basic technical skillsfor example, Y2K, euro
conversion, and PeopleSoft customization projects. But once offshore
organizations proved they could handle these initial projects, software
companies began offering them opportunities in areas such as system design,
application development and maintenance, quality assurance, infrastructure and
support services, implementation services, and new product engineering. The last
of these processes, new product engineering, is the one that we'd like to
discuss.